Nintendo has confirmed that the Switch console will not receive a price cut before April 2024. The company attributes the decision to the high overall costs of production, which have not come down in spite of a reduction in the cost of certain materials. Factors such as inflation and foreign exchange rates have also not helped the gaming giant, according to a recent investor Q&A.
Switch gaming prices
The investor Q&A also saw Nintendo disclose information on gaming prices for the Switch console. Responding to a query about whether the standard price for Switch game titles going forward will be $70, Nintendo President Shuntaro Furukawa clarified that decisions on pricing will be made on a case-by-case basis. The company recently launched The Legend of Zelda: Tears of the Kingdom at $70, a price point that marks a $10 increase from the traditional price of a Switch game. However, the company maintains that this price hike does not signal a general increase in the cost of their software.
Console sales trends
Sales of the Switch console have topped 125 million units, as the gaming console enters its seventh year on the market. However, the console’s sales are now slowing down. Xbox Series X|S and PlayStation 5 console prices have largely remained unchanged in most markets around the world since their launch in 2020. However, the Canadian, European, and UK markets saw a price increase for the PS5 due to the “global economic environment.”
New console
Nintendo is reportedly working on a new console, but has confirmed that it will not launch any new hardware until April 2024 at the earliest. In the meantime, the company will continue to monitor the prices of raw materials, which impact on procurement costs, carefully.
Raw materials and procurement costs
Even though it is acknowledged that raw material prices may decrease over time, Furukawa has cautioned that it would take a while for such reductions to be reflected in manufacturing costs. The company currently has no plans to reduce the price of their hardware during this fiscal year. Similarly, although the company has no plans to hike prices either, it is closely monitoring the situation, considering the weak yen and high procurement costs as key drivers in shaping the situation.
Price cuts and component costs
Console prices tend to come down over time, owing to falling component costs and strategic pricing initiatives. The Switch, however, has not seen such a price cut yet, since it launched at $300 in 2017, and the console’s price has remained stable since then.
Conclusion
Although it is disappointing news for consumers, Nintendo has confirmed that it will not cut the price of the Switch console before April 2024. The company says high overall costs, inflation, and weak foreign exchange rates are contributing factors to this decision. Similarly, while Nintendo is yet to decide on the standard price for Switch game titles going forward, the company insists that it will make pricing decisions based on a case-by-case basis. Additionally, as the company continues to work on a new console, it acknowledges the challenges posed by raw material prices, which impact significantly on procurement costs.
